Does Vertical Integration Decrease Prices? Evidence from the Paramount Antitrust Case of 1948

Ricard Gil

American Economic Journal: Economic Policy, 2015, vol. 7, issue 2, 162-91

Abstract: I empirically examine the impact of the 1948 Paramount antitrust case on ticket prices using a unique dataset collected from Variety magazine issues between 1945 and 1955. With information on prices, revenues, and theater ownership for an unbalanced panel of 393 theaters in 26 cities, I find that vertically integrated theaters charged lower prices and sold more admission tickets than nonintegrated theaters. I also find that the rate at which prices increased in theaters was slower while integrated than after vertical divestiture. These findings together with institutional details are consistent with the prediction that vertical integration lowers prices through the elimination of double marginalization. (JEL G34, K21, L11, L22, L42, L82)

JEL-codes: G34 K21 L11 L22 L42 L82 (search for similar items in EconPapers)
Date: 2015
Note: DOI: 10.1257/pol.20120245
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Citations: View citations in EconPapers (14)

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